Gas Tax Hike

January 4, 2009 4:43 pm

It’s the sort of news that makes conservative anti-tax groups go ballistic. The one silver lining of the ailing economy is the lower gas and oil prices we’ve enjoyed in recent months. But rather than let consumers enjoy that respite and save a few bucks, a federal commission is arguing that now is the time to raise gasoline taxes.

Maddening, yes, but perhaps necessary. At the very least, the National Commission on Surface Transportation Financing, by making the federal gas tax hike proposal, is bringing attention to the nation’s decaying road and bridge infrastructure and the diminishing funds to pay for repairs. Fuel tax revenue has declined because we all heeded government and other advice and are driving less. The cost of road and bridge work spiked in recent years, largely because of demand for materials in China and India, and because of the higher cost of petroleum products associated with paving.

The most logical and equitable system for distributing the pain of paying for the work is to tie it to use. The commission is expected to call for the federal gasoline tax to be raised from the current 18.4 cents per gallon to 28.4 cents per gallon, and the federal diesel tax to be increased from the cur-rent 24.2 cents per gallon to about 36 cents per gallon. The commission also recommends states raise their fuel taxes and institute more tolls.

The Maine Legislature’s Transportation Committee and Department of Transportation have wrestled with this dilemma in recent years, and have not discovered any easy answers. Sen. Dennis Damon, D-Trenton, crafted a plan that would have put a portion of the sales tax on vehicles and the excise tax paid when a vehicle is registered into the road and bridge work pot, along with fuel taxes. But an important part of his plan was to use those funds to capitalize a sort of revolving bond fund to pay for long-term, big-scale projects. It’s a good approach, especially the reliance on bonding, which is a good buy in this era of low interest rates.

Raising fuel taxes will be a tough sell, though, coming so soon on the heels of the highest fuel costs in U.S. history. But short of devoting general tax revenue to paying for the work, a combination of user fees and consumption taxes — perhaps creatively structured in combination with bonding — is the best bet for fixing the circulation system of our economy, our roads and bridges.